The ABA-Kobo Partnership, a Year Later

Retail

By Judith Rosen
|

Aug 30, 2013

Almost exactly one year ago, the American Booksellers Association announced that it would replace its e-book partnership with Google for one with Kobo, in time for the 2012 holiday season. While the resulting relationship has been much more successful for booksellers than the previous one, it points up the fact that for indies, selling e-books has never been just about the money. Although independents make only pennies in commissions on e-readers and shared profits on e-books, most booksellers are satisfied. What makes the Kobo partnership work is that it enables indies to retain their customers by offering e-books and print books.

“We know that the program is not perfect and that Kobo has a long way to go to establish its brand in the highly competitive U.S. market,” said ABA CEO Oren Teicher, who regards the program as “a work in progress.” Teicher said the ABA is hoping that “Kobo will emerge over time as the best global solution for all booksellers to sell digital content.” He also noted that Kobo is “absolutely committed” to the long-term success of the program.

“Kobo has made us a real player, with competitive technology,” said Jeff Mayersohn, co-owner of Harvard Book Store in Cambridge, Mass., who reads on an Aura HD. Although the impact of the program’s sales on the store’s bottom line is negligible, he views e-readers as “most important for customer retention. There are loyal customers who have been asking us for e-readers, now we don’t have to send them someplace else.” However, the Kobo partnership hasn’t affected traffic to the store’s Web site, since once a consumer has an e-reader, he or she can buy books directly from Kobo. Consumers with Kobo e-readers can also purchase e-books from the Kobo app on other devices, and the booksellers that sold the e-readers still get credit for the purchases for a three-year period.

While some booksellers have simply added a Kobo connection to their Web sites, even booksellers who have much more actively embraced the partnership (both in their stores and online), like Pete Mulvihill, co-owner of Green Apple Books in San Francisco, conceded that on the face of it, the Kobo program looks “abysmal.” Still, he regards the $700 he’s made since Kobo e-readers began shipping late last November as “gravy,” since the Toronto-based company takes care of the back end. “It’s not a profit center, but I’m losing fewer customers,” he said, adding, “We’ve acquired 225 customers for Kobo. They signed up because they love my store. It’s the same as if you can cut your phone bill by $50. Why wouldn’t you?”

At Greenlight Bookstore in Brooklyn, N.Y., co-owner Jessica Stockton Bagnulo credits Kobo with bringing new customers to the store and its Web site. “I’d say anecdotally that the bulk of customers who buy e-readers [through the program] are those who know about it from reviews and have found Greenlight in their research,” she said. Sales on greenlightbookstore.com have gone up 21% for the first eight months of the year, over the same time period in 2012. “This is probably partly due to customers finding us because of Kobo,” said Bagnulo, “and partly due to the growing awareness of our core customers that they can do their shopping with us online.” Her gross Kobo e-book sales for the first nine months of the program were over $6,000, close to double the store’s total for the Google program over a significantly longer period.

Village Books in Bellingham, Wash., was a strong supporter of the old Google program, and now supports Kobo; the store has appointed a six-member “e-team” of frontline booksellers to work with customers on e-books and e-readers. Sam Kaas, who heads the team, schedules tutorial sessions, orders devices, and puts out a monthly “eBook ePistle” e-newsletter to promote the store’s devices and e-books, which include the digital edition of It Takes a Village, Village Books cofounder Chuck Robinson’s self-published title about the 33-year-old store. “The reason we’re in it is the same reason we picked up on the Espresso Book Machine. We’re really committed to staying on the cutting edge,” said Kaas. “[Bellingham] is a college town with a lot of avid travelers. The reality is, we’re a store in a community that wants this kind of service.”

Not all booksellers are quite as enthusiastic as Village Books, and although some have pared down device inventory, most plan to restock e-readers for the holidays. Through Ingram, they can replenish existing e-readers and add new ones. Last week, Kobo announced the fall launch of a 6-in. Kobo Aura, a Google-certified Kobo Arc 10HD, and two Kobo Arc 7 tablets.

Many of the stores with the most sluggish e-sales are in more rural areas. Liza Bernard, co-owner of Norwich Bookstore in Norwich, Vt., said, “We appreciate ABA’s efforts to keep us on the playing field, though we are more like benchwarmers than star players. Kobos are so unknown [in the area].” She noted that the extra time spent reconciling accounting for e-book sales and e-reader rebates is probably not covered by the income generated.

“I’m a little lukewarm about [Kobo], because we haven’t seen a lot of return,” said Nicole Magistro, co-owner of the Bookworm of Edwards in Edwards, Colo. On the other hand, she added, “it keeps us relevant in [our customers’] minds, even if they don’t use that service. We provide gift wrapping, too, and we don’t make money on that.” More importantly, she values being able to say “yes” to her customers when they ask whether the store sells e-books. It’s the same reason that she also works with Book Renter on textbook rentals. “In this day and age, we have to make sure we stay relevant,” she reiterated.

For bookselling newbie Grant Hill, who took over That Bookstore in Blytheville, Ark., in January, selling e-books has been particularly hard, especially when he’s still learning about both retail and the book industry. “There are probably 25 or 30 people whose [Kobo] accounts are set up through our store,” he said. “It’s never going to make up very much of our sales, and we don’t make [much] money on the e-readers. It’s not really helping or hurting [our business]. I don’t know if another year out will make much difference.”

Kobo, though, has shown that it’s determined to make the relationship with indie booksellers in the U.S. work. Last quarter, it launched a series of ads on NPR, and, according to chief content officer Michael Tamblyn, the company plans to keep them going. It also continues to expand its online store with a new magazine section, as well as an area for kids and parents. By year’s end, Tamblyn anticipates having Kobo relationships with 700 ABA stores, up from the 480 stores that are now participating.

It’s to Kobo’s advantage to make the relationship work, since, said Tamblyn, “the customers we get through ABA spend twice as much as other customers. They’re our best average customers in North America.” To woo more ABA customers, and stores, Kobo is focusing its efforts on the in-store experience—not just displays, but in-store programming as well. In November, it will hold its first event with self-published Kobo authors at Jan’s Paperbacks in Aloha, Ore.

As those who own digital readers become even more attached to reading on them, the Kobo-ABA partnership could become even more important. In its 2013 U.S. Book Consumer Demographics & Buying Behaviors Annual Review, Bowker found that 80% of book purchases by consumers who own e-reading devices were for e-books, up from 74% in the fourth quarter of 2011.

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